No one buys rental properties or invests in real estate to lose money. Losing money should never be a goal for any investor in any asset class. Although we are in a very different economy than we were the past few years, the strategy is still the same: Preserve capital and grow your investment.
Most people will look at what the cash flow is on their rental property and think that’s all there is to it: cash flow. But this just isn’t true. There are (at least) three additional ways that real estate pays off.
3 Overlooked Real Estate Wealth-Builders
Appreciation is usually a great long-term play, but in this market, it is proven possible to be a short-term play also. Appreciation is the value of your property whether through upgrades, market cycle, or location. Depending on your market, real estate can go up in value from as little as 1% per year to 10%-plus per year, just by holding on to it.
Of course, the economy has a lot to do with appreciation, as does the individual market. Strategically selecting the property’s location is big way to play the appreciation game. Say you bought a house in an area of town that is on schedule for some community development, such as a shopping center or other attraction. This can amount to a huge payout for you, as more than likely people will want to live closer to such amenities.
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